Dish Network Said to Plan Nationwide Satellite Broadband

Dish already offers satellite broadband through a partnership with Carlsbad, California-based ViaSat Inc., though that only covers certain parts of the U.S. Photographer: Daniel Acker/Bloomberg

Aug. 16 (Bloomberg) -- Dish Network Corp. is preparing to
introduce a nationwide broadband-Internet service using a
satellite from sister company EchoStar Corp., according to three
people familiar with the situation.

The EchoStar 17 satellite, launched into orbit July 5, can
support download speeds of 15 megabits per second, although
introductory nationwide packages will probably offer rates of 5
megabits so the system can take on more capacity, said one of
the people, who declined to be named because the plans are
private. Dish and EchoStar can handle about 2 million new
Internet customers with the service, the person said.

The move is the result of technological advances for the
U.S. satellite industry, which can now use higher-frequency
bands to offer faster broadband to more people. The capacity for
these kinds of services has climbed “by an order of
magnitude,” said Deepak Dutt, vice president of investor
relations at EchoStar, who declined to comment on the Dish deal.

Dish expects to formally offer the service in late
September or early October, mainly to subscribers in rural areas
who may not have access to cable broadband, two of the people
said. Bob Toevs, a spokesman for Englewood, Colorado-based Dish,
declined to comment.

2008 Split

EchoStar and Dish became separate companies in January
2008, with Charlie Ergen remaining the chairman of both. The
details of how they will split revenue and how much the service
will cost consumers are still being discussed, one of the people
said.

Dish shares fell 0.1 percent to $31.01 at 10:53 a.m. New
York time. The stock had climbed 9 percent this year through
yesterday. EchoStar, up 36 percent this year, fell 0.6 percent
to $28.24.

Dish already offers satellite broadband through a
partnership with Carlsbad, California-based ViaSat Inc., though
that only covers certain parts of the U.S., including areas east
of the Mississippi River and the West Coast. It gives some
customers speeds of as much as 12 megabits per second. The new
offering will augment that product and give Dish nationwide
coverage, the people said.

By packaging satellite broadband with its current video
service, Dish can offer customers a bundled option. That means
it will compete more directly with cable companies, as well as
satellite rival DirecTV, AT&T Inc.’s U-verse and Verizon
Communications Inc.’s FiOS.

Future Expansion?

Dish may need to add more satellites to expand the service
beyond 2 million people while maintaining the same speeds. The
company, which has a total of about 14 million customers, hasn’t
disclosed how many users are served by the ViaSat agreement.

Dish is waiting for Federal Communications Commission
approval to use its wireless spectrum to offer mobile Internet
and phone service, which the company could bundle with satellite
TV and broadband. That would give users a so-called quad play.

The EchoStar service is meant for customers who can’t get
the faster speeds provided by cable and phone companies in more
urban areas. Comcast Corp., the largest U.S. cable provider,
offers as much as 305 megabits per second. Verizon FiOS,
meanwhile, goes as high as 300 megabits.

Most home Internet users typically don’t notice a
difference in speed beyond 25 to 50 megabits, according to
Jonathan Atkin, an analyst with RBC Capital Markets in New York.

Dish Chief Executive Officer Joseph Clayton said in January
that the market potential for satellite broadband service is
“substantial, given the nearly 8 million to 10 million mostly
rural American households that are unserved.”

Separately, Dish reached an agreement in principle with
Sinclair Broadcast Group Inc. on retransmission fees, keeping 70
broadcast stations on the air for its customers. The companies
agreed today to extend their existing programming contract two
weeks to allow both parties to sign off on a final agreement.

Dish had said earlier this week Sinclair was demanding more
money for its stations than any other broadcast group in the
country.